Law & Disorder —

Jury finds iPhone infringes Nokia, Sony patents owned by “troll”

Patent trolling goes corporate—and wins.

When MobileMedia Ideas formed in 2010, it was probably the biggest sign yet that the idea of "patent-trolling" had gone corporate. The company exists solely to get licensing fees from essentially the entire cell phone industry—it acquired about 300 patents from Sony and Nokia. It's headed up by Larry Horn, the same CEO who runs the MPEG-LA licensing pool.

In March 2010, MobileMedia sued Apple, HTC, and Research in Motion in separate lawsuits. The Apple case was first to head to trial. This morning, following a one-week trial and several hours of deliberation spread over three days, a Delaware jury returned a verdict that found Apple's iPhone 3 and iPhone 4 both infringe three patents that cover widely used smartphone features. The trial was only on infringement; a separate damages trial is still unscheduled.

Horn refers to the MobileMedia model as simply good licensing practice. But the model is the same one that has been criticized for a decade now in tech circles—create a shell company without any actual business, get patents, file lawsuits. Defendants are left with big legal bills and little leverage since they can't file an effective counter-suit against a plaintiff with no operations.

The three patents at issue cover very basic smartphone technologies: integrating a camera into a phone, call handling, and features like sending a call to voicemail. The patents infringed are numbers 6,070,068 (call handling); 6,253,075 (rejecting a call and putting it to voicemail); and 6,427,078 (integrating a camera into a smartphone.)

MobileMedia is closely connected to MPEG-LA. In addition to having the same CEO, MobileMedia is majority-owned by an MPEG-LA subsidiary. Nokia and Sony own a minority share of the company, which means they stand to profit from this court win against Apple.

The strategy of working with MobileMedia effectively lets Nokia and Sony go after their competitors without getting hit back. It's a full-scale embrace of the "patent troll" model by companies that have historically been the biggest targets of such suits.

It's an interesting week for a jury to find that iPhones infringe Nokia patents held by a shell company. On Monday, Nokia's chief of intellectual property voiced a full-throated defense of the patent trolling model at an FTC event. The company's unusual stance puts it squarely at odds with other corporate panelists, including HP, Cisco, and Rackspace.

The MobileMedia case is a clear sign of the times. There's so much money to be made from the model of "pure" patent enforcement through patent-licensing companies that it's practically irresistible. That's the case even to companies that have had to make repeated payouts under that model.

"Obviously, we're pleased, and we believe it was a very well thought out and justified verdict," said MobileMedia Ideas CEO Horn this morning in an interview with Ars. "Our real wish is that Apple will take a license. We're prepared to offer them one on reasonable terms."

The MobileMedia Ideas lawsuit against Apple originally had 10 patents in it, but the judge narrowed it down to three before trial. Horn declined to comment on MobileMedia's other ongoing lawsuits against HTC and RIM. He did say at least one patent from the Apple lawsuit is being used in those cases as well.

Horn answered a few other questions for us as well.

Ars: Why couldn't Nokia and Sony enforce these patents directly and sue in their own names?

Horn: I can't really speak to that. They could have. They chose to sell them to us and have them us monetize them. That's the area of our expertise.

Ars: If Sony and Nokia have these great smartphone inventions, why not convince customers of their value rather than sue? Does this represent competing in the courtroom rather than the marketplace?

Horn: The US Constitution assures that an owner of a patent will have the [exclusive] benefit of its invention for a certain time. Inventions happen through R&D and large investments. It's up to them to determine how and to whom they license it and wish to exploit it. It wouldn't matter if it was Nokia, or Sony, or MMI. It's a property right.

Ars: One of the inventors on the smartphone camera patent, Kari-Pekka Wilska, formerly of Nokia, took the stand as part of your case. Are you claiming that these inventors at Nokia actually created the smartphone-with-smartphone?

Horn: The patent goes to how the camera and the phone are integrated together to work seamlessly with a processor. It is the implementation of the camera with the phone in a way that made technical and economic sense, given memory limitations and anything else. The invention reads on how the camera is implemented in the smartphone—how it's integrated for purposes of storing a photo, for retrieving a photo, and messaging it, through e-mail or otherwise.

Ars: Another patent is on sending an e-mail to voicemail. Are you suggesting that before this patent was filed, there was no way to reject a call and put it through to voicemail?

Horn: This patent tells you how to do it in one step. The immediate result of doing so would terminate that call and throw it into voicemail. The whole point of patents is that one patent builds on another, in terms of the state of the art and understanding.

At the time of publication, Ars has reached out to Apple for comment via e-mail without response. This article will be updated should the company offer comment.

120 Reader Comments

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to be practicing anything. Drug research companies don't practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

"Ars: If Sony and Nokia have these great smartphone inventions, why not convince customers of their value rather than sue? Does this represent competing in the courtroom rather than the marketplace?" I wonder if Ars asked Apple the same question :-)

"This patent tells you how to do it in one step. The immediate result of doing so would terminate that call, and throw it into voicemail. The whole point of patents is that one patent builds on another, in terms of the state of the art and understanding."

Isn't this obvious? I thought that was a criteria for rejecting patents.

How is this different to Apple and Google buying Kodak patents jointly? Or to the Rockstar Consortium (Apple, MS, Sony etc) which owns Nortel's patents.

Whenever companies group their patents together for licensing purposes, they are basically creating a NPE (non practicing entity), and using those patents against competitors, either just by holding them and preventing others from using them, or by licensing them/suing competitors.

Pooling patents isn't something new that Nokia and Sony have done, everyone else is doing it too, partly because they have to.While in many ways this company might be an NPE, it's not really an NPE because it reflects the patent interests of shareholders, Sony and Nokia, much like the joint partnership between Apple and Google for Kodak patents is either an actual NPE (if it's a saperate company which is a joint venture) or a virtual NPE if it's a different type of agreement.

If we'd just get rid of software patents, these kinds of problems would go away. Of course, something tells me Apple would be more than happy to eat this loss and live with a broken system than rail against it

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

Even though I don't mind Apple taking a black eye in court, I loathe these patent trolls much more. This was only made possible through the gradual perversion of the law. They follow the letter of the law but not the spirit imo. Patent and copyrights were (at least in my mind) more for individual inventors rather than corporations. Then corporations became people. Now corporations are shells that do nothing but attack other corporations. Does this really help anyone now that it is so far removed from the original person. Sounds more like a parasite to me.

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

Perhaps a patent troll in legal form, but not in the spirit of the term as I've always known it as their parent companies do in fact actually make products based on the patents. Safe to call them a NPE, but I'd be hesitant to call them a patent troll. NPE != troll. All trolls are NPE, but I'd agree not all NPE (like in this case) are always trolls.

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

My argument would be then, remove the requirements for having a lawyer to gain such patents. All Nokia and Sony have done is chosen to do is use the same lawyers.

My argument would be to not give out patents for painfully basic and obvious ideas. The people who apply for such patents should be utterly ashamed of themselves, but I've never seen such a person that actually possessed the capacity for shame.

Approaching life with only your own interests in mind- completely neglecting the interests of society at large- is just shooting yourself in the foot. It's mind-boggling how many people can't understand the long term implications of their actions in cases like this.

Let's say Apple is found liable for massive damages, let's say $1 billion or so. Then, all Motorola Samsung needs to do is sue Nokia and Sony for infringement of their patents and also win similar massive damages. Then, everyone can simply pass the money around in a circle, as the lawyers take their cut each time the money changes hands.

I'm becoming more convinced that the only way to stop these lawsuits from continuing to drain money and time from actual innovation and development is to force everyone involved into a federally mandated and regulated patent pool that makes nobody happy.

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyrighted photograph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

Hey, remember all those in favor of MPEG4-AVC aka h.264 to be the winning codec vs. webm? Remember how they said it was better since we knew that the patent pool would solve the issues of who owns what and prevent the lawsuits of MPEG1 Layer 3?

Good times. I'm sure Horn will start focusing on all those "leeches" who use webm soon. It's been 2 years and no patent pool yet, but judging by this victory, I'm sure he's get to it soon...

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

My argument would be then, remove the requirements for having a lawyer to gain such patents. All Nokia and Sony have done is chosen to do is use the same lawyers.

My argument would be to not give out patents for painfully basic and obvious ideas. The people who apply for such patents should be utterly ashamed of themselves, but I've never seen such a person that actually possessed the capacity for shame.

Approaching life with only your own interests in mind- completely neglecting the interests of society at large- is just shooting yourself in the foot. It's mind-boggling how many people can't understand the long term implications of their actions in cases like this.

Oh please... let's just be glad this "troll" didn't sue for willful infringement. Are you trying to convince me that Apple didn't try to patent this themselves? Shoe on other foot...

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyright phootgraph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

It's some critical balogna (or baloney, if you prefer).

You seem to be confusing support for the model of patent litigation with support for people defending the patents they have been given.

The article implies that this is a troll case, while in fact it's a legitimate case brought about by two companies who make use of the patents in question, but through a "third party" (related third party).That's not to say the granting of the patents in the first place is correct, but the method by which they were protected is ridiculously mischaracterised by the article, and reeks of terrible journalism/lack of understanding, and a lack of editorial process.

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

My argument would be then, remove the requirements for having a lawyer to gain such patents. All Nokia and Sony have done is chosen to do is use the same lawyers.

My argument would be to not give out patents for painfully basic and obvious ideas. The people who apply for such patents should be utterly ashamed of themselves, but I've never seen such a person that actually possessed the capacity for shame.

Approaching life with only your own interests in mind- completely neglecting the interests of society at large- is just shooting yourself in the foot. It's mind-boggling how many people can't understand the long term implications of their actions in cases like this.

I think I might apply for a patent for "a novel method by which human muscles can be loosened prior to strenuous activity," then sue everyone I catch stretching. Oh man, I could even go after the big chain gyms for their fitness classes. I could make bajillions!

Curious when did the last patent troll respectfully answers Ars request for comments? The non practicing entity argument is bogus. Patents are patents, nothing requires them to practicing anything. Drug research companies don't necessary practice making their drugs either. They're often contracted out to vendors in specific regions. Are they trolls?

The argument is against companies that make money solely through patent litigation. In cases were the idea they've patented is completely obvious to the technically literate, they have effectively contributed nothing to society; they merely charge fees for using an idea that anybody else could have (and likely several other people did) come up with earlier. Prescription drug patents have a great deal more complexity involved, I would imagine

My argument would be to not give out patents for painfully basic and obvious ideas. The people who apply for such patents should be utterly ashamed of themselves, but I've never seen such a person that actually possessed the capacity for shame.

The issues is that retrospectively these ideas are painfully basic and obvious. At the time of their fruition though, they are new, exciting, cool and eminently patentable......

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyright phootgraph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

It's some critical balogna (or baloney, if you prefer).

You seem to be confusing support for the model of patent litigation with support for people defending the patents they have been given.

The article implies that this is a troll case, while in fact it's a legitimate case brought about by two companies who make use of the patents in question, but through a "third party" (related third party).That's not to say the granting of the patents in the first place is correct, but the method by which they were protected is ridiculously mischaracterised by the article, and reeks of terrible journalism/lack of understanding, and a lack of editorial process.

Fair point - I suppose that, personally, I have a foul taste left in my mouth by previous third-party patent litigation. It's becoming more and more difficult to discern who is the "good guy" in any given patent battle.

Please allow me to introduce myselfI'm a man of wealth and tasteI've been around for a long, long yearStole many a mans soul and faithAnd I was round when jesus christHad his moment of doubt and painMade damn sure that pilateWashed his hands and sealed his fatePleased to meet youHope you guess my nameBut what's puzzling youIs the nature of my game

But that really has nothing to do with the "trolliness" of such patents. Bad patents are bad. Good patents are good. Non-practicing entities are immaterial to those two points.

As a counterpoint, it's also a fairly good rule of thumb that good patents (those with a solid technical foundation that are truly novel and non-obvious) aren't litigated, because the parties involved are all savvy enough to recognize a valid patent. For the same reason, "bad" patents aren't litigated because they'll get knocked out. It's the patents (and really, it's the patent claims) of ambiguous quality and scope that get litigated because both sides think they can win. It's the ambiguity that I think makes a patent an attractive tool for a NPE/troll.

However, the fact is that when an NPE sues, it generally has no assets for a defendant to attack/get remedy from with valid counterclaims, so it is mostly immune in practical terms from any negative judgment. The identity of the plaintiff does, I think, add to the "trolliness" of the lawsuit.

The last interview question starts with "Another patent is on sending an e-mail to voicemail." Should this be "...sending a call to voicemail"?If it's actually correct as written, I wasn't aware that Apple had implemented that capability.

But that really has nothing to do with the "trolliness" of such patents. Bad patents are bad. Good patents are good. Non-practicing entities are immaterial to those two points.

As a counterpoint, it's also a fairly good rule of thumb that good patents (those with a solid technical foundation that are truly novel and non-obvious) aren't litigated, because the parties involved are all savvy enough to recognize a valid patent. For the same reason, "bad" patents aren't litigated because they'll get knocked out. It's the patents (and really, it's the patent claims) of ambiguous quality and scope that get litigated because both sides think they can win. It's the ambiguity that I think makes a patent an attractive tool for a NPE/troll.

However, the fact is that when an NPE sues, it generally has no assets for a defendant to attack/get remedy from with valid counterclaims, so it is mostly immune in practical terms from any negative judgment. The identity of the plaintiff does, I think, add to the "trolliness" of the lawsuit.

I think just about everything you said is bogus. Certainly backed up by no actual data.

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I doubt most of the comments you refer to in any way like the current patent situation. Just the article pretty badly bastardizes a loaded term. We are nerds here so we are sticklers for correctness :-)

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyright phootgraph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

It's some critical balogna (or baloney, if you prefer).

You seem to be confusing support for the model of patent litigation with support for people defending the patents they have been given.

The article implies that this is a troll case, while in fact it's a legitimate case brought about by two companies who make use of the patents in question, but through a "third party" (related third party).That's not to say the granting of the patents in the first place is correct, but the method by which they were protected is ridiculously mischaracterised by the article, and reeks of terrible journalism/lack of understanding, and a lack of editorial process.

What you are not understanding is that this patent entities make not products and therefore cannot be targeted in countersuit which makes for some painful decisions. This takes this away. The only way forward for Apple and anyone else is to make such entities and sue the hell out of everyone as there is no downside. The war goes thermonuclear to use a popular phrase, no one wins but the cockroaches (lawyers).

My argument would be to not give out patents for painfully basic and obvious ideas. The people who apply for such patents should be utterly ashamed of themselves, but I've never seen such a person that actually possessed the capacity for shame.

Well...what is obvious to you isn't to everyone else. And many many ideas are said to be "obvious"--AFTER people hear about it...but not before.

The article has a number of typos and mistakes. The one you mention is the largest. There are two more that I see:

1. The sentence "They chose to sell them to us and have them us monetize them" clearly has an extraneous word "them".2. "Another patent is on sending an e-mail to voicemail". Shouldn't this be "sending A CALL to voicemail"? Not sure what sending an email to voicemail would even mean.

[What you are not understanding is that this patent entities make not products and therefore cannot be targeted in countersuit which makes for some painful decisions. This takes this away. The only way forward for Apple and anyone else is to make such entities and sue the hell out of everyone as there is no downside. The war goes thermonuclear to use a popular phrase, no one wins but the cockroaches (lawyers).

Apple is already part of several such entities, some much larger and with huge portfolios. Classifying such cooperatives as trolls is a little disingenuous, since the companies individually make many products using those patents and others and are equally open to lawsuits from competitors.

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyrighted photograph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

It's some critical balogna (or baloney, if you prefer).

So if you take a photo of say a McDonald's restaurant, you can't profit from it, because McDonald's owns the trademark and copyright of it.

Plus, you can do an obviously derivative work and still sell it. Happens all the time in books, movies, etc. and they are all copywritten.

I'm shocked at the number of comments here that seem to support the current patent litigation model. Frankly, I believe that the whole IP law factory needs to be shut down for retooling.

I'm a hopeful author and photographer. I understand copyright and the value it holds with the creator. However, patent laws have evaporated all of the common sense from the solution and are left with a salt of bad will and ill intent. I was able to kill a call and have it transferred to voicemail from my desk phone long before there were smart phones. I don't think porting an existing feature to a new platform should constitute any trademark, patent or copyright. If I take a photograph of someone else's currently copyrighted photograph, then converted it to B+W, I can't turn around and sell it for profit because I found "an integral method by which photographs can be digitally copied and converted to non-colored schemas."

It's some critical balogna (or baloney, if you prefer).

This...... ^^^^^^^^

Reiterating this point, as it seems to really hit the heart of the matter, in my viewpoint.

Honestly, from my perspective, a large part of the problem originates in the USPTO not doing their homework with these things. I understand that the burden of proof is on them to justify denying a patent, and that can sometimes be a difficult hurdle to cross, but some of these patents they have awarded..... really strikes me as an unwillingness to question what is being handed to them.

The article has a number of typos and mistakes. The one you mention is the largest. There are two more that I see:

1. The sentence "They chose to sell them to us and have them us monetize them" clearly has an extraneous word "them".2. "Another patent is on sending an e-mail to voicemail". Shouldn't this be "sending A CALL to voicemail"? Not sure what sending an email to voicemail would even mean.

Down-voted by the author

But you can indeed send emails to voicemail and have them read using text-to-speech.